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One of the truly
spectacular sights is from the airplane as it makes its approaches to Los
AngelesInternationalAirport
at dusk. Down below is the illuminated “live” map of Los
Angeles with its winding and
intersecting freeways, with an endless flow of white headlights and an
opposite flow of red tail-lights. It reminds me of the human bloodstream with
its flow of white and red blood corpuscles. As I was flying in the other day
I could not help but contemplate that possibly just a handful in a million people
down there may realize what a fatal year 2007 has been, as the rest are
completely oblivious to the great dangers awaiting the world on this
Thanksgiving Day.

Over the last thirty-five
or so years people have been de-sensitized to the
‘chill-and-fever’ syndrome epitomized by the gyrating value of
the dollar. It had its ups and downs but, here we are, still doing business
using the services of ‘Old Trusty’. People appear to be forgetful
that the dollar is steadily losing value, losing purchasing power, losing the
all-important respect of foreigners. They have been brainwashed into thinking
that inflation, like continental drift, is God-ordained. There is nothing
human beings can do about it. It would never occur to people that they are
victims of deliberate plundering by their own government, and deceitful
pilfering by their banks, covered up by the mendacity of academia and the
financial media.

By this fall we have
reached the threshold, we have crossed the continental divide, we have passed
the ‘point of no return’ as it is becoming obvious that bad debt
in the system has reached and surpassed ‘critical mass.’ The
chain reaction has started. In the fullness of time the nuclear explosion is
bound to occur.

The history of the dollar
boasts two Waterloo’s.
The first one was in 1933. That year marks the default of the U.S.
government on its domestic gold
obligations, accompanied by the confiscation of the people’s gold by
F.D. Roosevelt. He appealed to patriotism saying that in complying with his
Executive Order people were saving the country from economic ruin. The bad
faith behind this capricious and unconstitutional act was shown by the fact
that no sooner were people forced to give up gold in their possession than
the government would write up its value by 69 percent, pocketing the
difference as ‘profit’. So much for the provision of the
Constitution that “…nor shall private property be taken for
public use without just compensation.”

The monetary bloodstream
of this nation was given the cancerous qualities that characterized the
currency of both Soviet Communism and Nazi Socialism, neither of which has
survived the test of times. Nor will the irredeemable dollar.

There was a second Waterloo
for the dollar, in 1971, marking the default of the U.S.
government on its international
gold obligations. In economic terms this event was even more devastating than
the first. It triggered a snow-balling process as revealed by the price
charts of commodities such as wheat, sugar, copper, not to mention crude oil,
and the destabilization of foreign exchange and interest rates, making debt
proliferate and rendering government bonds totally unsuitable for the
purposes of saving.

I have been often asked
the question: “why gold?” I avoid giving an answer in terms of the
physical or chemical qualities such as weight, inertness, and the like. My
answer usually refers to the nation’s monetary bloodstream which
becomes corrupted as the disease-fighting gold corpuscles are removed.

Debt is an indispensable
economic instrument. It has a great beneficial impact on human welfare. But
like fissionable nuclear material, it is shot through and through with
extreme danger. If its quantity exceeds critical mass, then chain reaction is
bound to set in causing a nuclear explosion. The role of gold is precisely to
prevent that from happening. Gold is the agent that can detect bad debt and
stop its proliferation in good time. Thanksgiving 2007 is special because we
are just re-learning the ancient lesson that no banking system can safely
operate without gold. You cannot measure the quality and quantity of debt in
terms of another, just as you cannot measure the length of an elastic band in
terms of another.

What has happened this
fall is that the presence of bad debt in the economy has been established.
However, bad debt is in hiding. Who is hiding it? “Nobody alive is
above suspicion!” One bank can no longer trust another in accepting an
overnight draft. Maybe the other feller is trying to pass on bad debt. True
enough, banking is based on trust. But if you are not allowed to test debt,
or to spot bad debt through demanding payment in gold, then trust is not
justified. All debt becomes sub-prime. Why should a client trust his bank, if
banks cannot trust one-another?

Thus, then, my answer to
the question “why gold?” is that the gold corpuscles fight
incipient leukemia in the nation’s monetary
bloodstream. It’s not that withdrawing them causes sudden death. But it
inevitably causes death in the long run. A rather painful and ugly death.

Since currency touches
practically all our people, everybody is contaminated by a corrupted monetary
bloodstream. The effects of monetary leukemia are
many and in some respects subtle. The withdrawal from the monetary
bloodstream of the gold corpuscles which, within broad limits, keep other
money and credit corpuscles in good order, has produced the typical results:
profligate government spending, extravagant growth in public and private
debt, the monetization of government debt, extensive socialization,
artificial exhilaration (not to say irrational
exuberance), bloating, intoxication, fever, chills, nervousness,
irritability, irresponsibility, dishonesty, immorality, decline in the
purchasing power of the currency and, characteristically, the insane fear of
gold ― as the drug addict fears the withdrawal syndrome. All these
mixed with elements of a pronounced monetary revolution and the scattering of
dollars and other resources among the nations of the world. The dishonesty
involved in, and flowing from, the use of irredeemable currency permeates
practically all aspects of our economic, social, and political system and
provides yet another instance of how “corruption grows as naturally as
fungus on a muck heap” (Andrew Dickson White in his classical book Fiat Money Inflation in France).

The pulsation of this
corrupt monetary bloodstream through an economy finally weakens and
undermines the nation involved; and unless removed before the logical and
final consequences are reached, eventually brings destruction ―
economic, political, and social.

When the people of a
nation operate with a redeemable currency every individual is able to
exercise direct control over the government’s use of the public purse
to the extent of his purchasing power. If he is disturbed by government
profligacy or unsound banking practices, he can conserve his purchasing power
by converting it into the gold coin of the realm. He is not compelled to join
forces with others to form a third political party in an effort, usually
futile, to protest the profligacy of government and the duplicity of the
banks. But if a considerable number of people demand redemption of non-gold
currency in gold, the banks experience the impact in the form of diminishing
bank reserves which is passed on to the U.S. Treasury and thence to Congress.
These demands for redemption are the flashing red lights on a central
signal-board ― signals the banks and the government respect. The wires
were crossed at the signal-board when gold corpuscles were removed from the
monetary bloodstream. Ever since signals deliver the wrong message.

It is true that a
redeemable currency may, and frequently does, depreciate in a pronounced
degree because of the misuse of credit and debt; but it cannot depreciate to
the same extent irredeemable currency can. The limit in case of the latter,
as it will be most dramatically demonstrated by the dollar, is zero.

When the government cut
all the wires from individuals to the central signal-board in Washington,
it opened the way to an orgy of profligate spending, to an unlimited
depreciation of the dollar, to the ultimate destruction of this nation, and
to the overthrowing of world order. The government and the banks, freed from
their proper responsibility of meeting their promises to pay, now have an unrestrainable control over the lives of the people of
this nation. Freedom is lost. We have all become slaves. It is this control
that the government and the banks want to perpetuate through the regime of
the irredeemable dollar.

The fact that the people
have lost control over the public purse constitutes a mortal danger
threatening the well-being of the United
States
― and that of the world as shown, for example, by the usurpation of
war-making powers by the president.

The proof, if one is
still needed, that the removal of gold corpuscles from the monetary
bloodstream ultimately leads to cancer, is the exploding derivatives market.
Its size has exceeded the $ ½ quadrillion (500 trillion) mark. Compare
this with the annual GDP of the U.S.
at about $ 14 trillion. Worse still, the derivatives market is growing at a
pace of 40 percent per annum, roughly doubling in size every other year. This
is cancer, which mainstream economists and politicians want you to ignore.

What is the solution? The
answer is obvious. Put the gold coins back into circulation. Restore a
healthy monetary bloodstream. Unfortunately, this is easier said than done.
The failure of the initiative of Malaysia
to revive the Islamic Gold Dinar is a case in point. Mainstream economists
call me an old foggy-bottom and an unreconstructed belly-acher.
They point to the Gold Eagles, Gold Maple Leafs, Gold Pandas, and Gold
Koalas, in addition to the Islamic Dinar. “See, they are all sitting
out there and refuse to circulate. They go into piggy-banks and cookie-jars.
Gold just does not behave as it used to, they say. Gold is passé. You
can’t put spent tooth-paste back into the tube”.

I want to explode this
kind of disingenuous reasoning for once and all. The gold coins which
governments have sold for profit were not meant for circulation. Governments
don’t want them to circulate. They are souvenir coins, conversation
pieces that people will not spend, and for a very good reason, too. People are not sure they can get them back
on the same terms.

By contrast, gold coins
issued constitutionally will
circulate. The Constitution mandates the striking of the coin of the realm free of seigniorage.
People surrender the exact weight and fineness of gold at the Mint in
exchange for the coin of the realm free of charge. The right to convert is
unlimited. If the government opened the U.S. Mint to gold, then people would
start spending their Gold Eagle coins because they would know they had a
constitutional guarantee to get replacement for their coin on the same terms.
This is the wisdom of Isaac Newton, Master of the Royal Mint in London,
who put England
on the gold standard.

We may take it for
granted that usurpers at the Federal Reserve and the U.S. Treasury have no
use for Newton.
They will not relinquish without a fight their monopoly of charging 100% seigniorage, as against the constitutionally mandated 0%,
on issuing new money.

So how are we to restore
gold corpuscles to the monetary bloodstream? It may well be that the solution
is in the hands of minorities such as native Hawaiians, American Sovereign
Indian Nations, or the First Nations of Canada, to establish a Mint on their
reservations or territory. They don’t need more gambling casinos or
more liqueur outlets. They need a Mint in order to open it to gold. The
police scientists at the Federal Reserve and the U.S. Treasury may stop short
of putting the Mint owned and operated by minorities out of business using
Waco-type violence.

If the minorities did
open a Mint to gold, it would be “their finest hour.” A grateful
posterity would remember them for their heroism in defying slavery
insidiously imposed by a reactionary monetary regime on them as well as on
the rest of the world.

If they did that, we
could truthfully say that “never have so many owed so much to so few”.

Professor Antal E. Fekete is a mathematician and monetary scientist., with many contributions in the fields fiscal and monetary Reform, gold standard, basis, discount versus interest and gold and interest.